Intellectual Property Regimes, Technology Adoption and Organization of Firms

Recent debates have emerged in understanding the role of globalization on the demand for more skilled workers or executives and organization of firms, even in developing countries. However, there remains little or no evidence as to how a firm reacts to a change in the intellectual property regime in terms of demand for different types of workers and how does that further change the organizational design of a firm. To the best of our knowledge, this is the first paper to explore how shifting of intellectual property regimes affect within- and between-firm executive compensation and organizational design. We use the setting by Garicano (2000) to analyse how organization of firms, process and structure, changes because of stronger patent policy. Our work builds on the idea that stronger patent rights may induce a firm to use more technology in the production of goods as returns to technology-intensive goods are higher. This can encourage apriori high-tech firms to re-organize their production more towards technology-intensive tasks as compared to low-tech firms. Since higher value of technology adoption can give rise to more of non-routine problems, this can create demand for managers or executives. Using a novel dataset for Indian manufacturing firms, which reports detailed data on executive compensation (by different management levels) and utilizing a quasi-natural experiment in terms of the imposition of a patent reform, we show that firms which are high-tech, before the imposition of the stronger patent policy, demand more managers relative to non-managers after stronger patent regime. Firms which are closer to the technological frontier, demand more executives. This result highlights that stronger patent regime may not only create between-firm inequalities but within-firm as well. Our results also reveal that increase in compensation happens through an incentive-based approach rather than fixed-wage component. Finally, stronger patent rights increase the differences in the hierarchical layers between firms.

  • Prof. Pavel Chakraborty, Jawaharlal Nehru University
  • |
  • 2017-07-26

Is financial inclusion good for bank stability? International evidence

Financial inclusion has become an important public policy priority following the recent global financial crisis. Yet, we know very little of how it impacts soundness of the providers of financial services. Using an international sample of 2,600 banks in 86 countries over the period 2004-12, we find that higher level of financial inclusion leads to greater bank stability. The positive association is particularly pronounced with those banks that have higher customer deposit funding share and lower marginal costs of producing output; and also with those that operate in countries with stronger institutional quality. The results are robust to instrumental variable analysis, controlling for bank fixed effects, alternative measures of financial inclusion, among several other robustness tests. Our results highlight that the importance of ensuring inclusive financial system is not only a development goal but also an issue that should be prioritised by banks, as such a policy drive is good for their stability.

  • Prof. Sushanta Mallick, Queen Mary University of London
  • |
  • 2017-07-24

The Promise & Pitfalls of ICT for Agriculture

In this talk, he will be talking of the research based on two experiments. The first one is about 'the effectiveness of "information only" interventions'. The authors examine the role of a very low-cost, "light-touch" information intervention, evaluating a mobile phone-based agricultural advice service provided to farmers in India. Demand for advice is high; and provision of advice dramatically changes farmers sources of agricultural information. They in turn observe modest but systematic changes in agricultural practices (analyzing indices of recommended seed, pesticides, fertilizers and irrigation practices) and, perhaps surprisingly, also find some evidence of increased yields in cumin and cotton. Information spreads, as non-treated farmers with more treated peers change practices and lose less to pest attacks. Though willingness to pay for the service is low, the value of the information externality exceeds the subsidy that would be necessary to operate the service. They estimate that each dollar spent on the service yields a $10 private return. The second experiment evaluates the prospects for individually-customized advice, using soil health card data. The Government of India has announced plans to deliver soil health cards to every farming family in India. The authors evaluate the quality of soil tests and comprehension levels of farmers. They then evaluate whether low-cost audio and video messages improve understanding of Soil Health Cards.

  • Prof. Shawn Cole, Professor of Finance, Harvard Business School
  • |
  • 2017-07-14